There is nothing the fat cats in Illinois won’t do to destroy public employee pensions.

The Civic Committee’s Ty Fahner demonstrated this when he spoke to a gathering of the Chicago Union League Club last month.

Fahner openly admits that he colluded with the bond rating agencies, getting them to lower their rating of Illinois bonds for the purpose of creating political support for gutting public employee pensions.

By lowering bond ratings the state might have had a more difficult time borrowing money. And it costs the state and the taxpayers more.

Fahner doesn’t care. He is on a mission to destroy public employee pensions.

But, is Fahner admitting to illegal activity in this video?

He was engaging in illegal activity if he made money on transactions based on his conversations with the bond rating agencies. That’s called insider trading.

To find that out would require Attorney General Lisa Madigan to open an investigation.

Or our get-to-it-tomorrow press to do some real investigative journalism.

Corporatists are alive and well in Illinois. The history of our State has been one of excessive greed and shameless hypocrisy, of corruption and oppression, of extortion and domination, of exploitation and deception, of selfishness and subjugation, of poverty and unemployment and inequitable taxation, of protection for the wealthy and their powerful interests, of exorbitant wealth for the few and scarcity of wealth for the many: government of the Committee, by the Committee, and for the Committee…

Most people believe the citizens of Illinois are victims of a partisan polarization and well-financed organizational interest group politics and policies, of compromised corporate-owned media that has been bought by the wealthy minority to shape what and how they think about fiscal issues, that the Illinois state government is held hostage by affluent and influential “special interests” (to protect the riches of the wealthy); where both the republican and democratic parties are one and the same “Money Party,” corrupted by briberies (campaign funding) made legal (Citizens United); and by those who can manipulate the state’s politicians without consequences, set the legislative agenda, and hoodwink and oppress an oblivious populace…

On November 14, the Civic Committee of the Commercial Club of Chicago, which leads the effort to overhaul Teachers’ Retirement System and the state’s other pension systems, sent a letter to Governor Quinn that said that there is no solution to fixing the long-term financial problems facing TRS and the other systems. This is a quote from the letter: “Our latest sobering analysis has led us to conclude… that under current circumstances the pension system is unfixable.”

Despite the finality of this statement, the Civic Committee nonetheless proposed a series of changes they said would “minimize the long-term damage.”

“Eliminate all cost-of-living increases”

“Institute a pensionable salary cap”

“Increase the retirement age to 67”

“Shift annual costs to local employers over 12 years or more”

“Before undertaking these reforms, it is critical that the pension funds immediately lower their discount rate (investment return) assumptions… Moody’s has suggested the high grade long-term corporate bond index rate, which was 5.5% for 2010 and 2011.”

Answer: The Civic Committee’s statement is fundamentally untrue. The long-term TRS financial problem can be fixed. In fact, if current state law is left unchanged, in 34 years TRS will be 90 percent funded. This path, however, does require tough choices and regular and increased funding from state government and TRS members.

The Civic Committee’s statement never gives any evidence that the pensions systems are “unfixable,” but only that in the future the state will pay more every year for public pensions than the Civic Committee says it wants the state to pay.

The Civic Committee has always been clear that it wants less tax money spent on pensions so the funds can be spent on other priorities. They also have pointed out for years that the majority of citizens do not enjoy a public pension. These are quotes from the statement:

“It’s crushing our ability to educate students, ensure adequate public safety and provide health care and social services to those who are most in need.”

“But moreover, it’s a slap in the face to the 95% of Illinois residents who do not participate in these pension systems.”

While the Civic Committee’s statement leaves an impression that there will not be enough money to pay for pensions in the future, in reality the opposite is true. Sufficient money is there to pay for pensions. The problem for legislators is deciding how to spend the available money and how much should be devoted to TRS and the other pension systems in order to ensure financial stability in the future.

The fiscal year 2013 state budget is $53 billion, not counting federal money. The total state contribution for TRS and the state pension systems in FY 2013 is $7.5 billion. There is enough money. The question is, as it has always been: where will that $53 billion be spent?

For TRS, the state’s contribution in FY 2013 is $2.7 billion, which is 5 percent of the entire state budget.

Left alone under current state law, the pension systems get fixed over the next 34 years – but this fix is expensive, will take a long time and carries serious consequences. The fix works if the state continues to pay its entire annual contribution – which is a lot of money every year – and if Tier II members continue to subsidize the system – which is fundamentally unfair to them.

Under current state law, Tier II members pay the same contribution to the state from every paycheck that Tier I members pay – 9.4 percent. However, because the Tier II member benefit costs less than the Tier I member benefit, the Tier II members are paying the entire cost of their benefit and a little extra. About 36 percent of the Tier II member’s 9.4 percent salary contribution is a subsidy that offsets the costs of Tier I benefits.

Between 2012 and 2038, the number of Tier II members paying into TRS will continue to grow and eventually will eclipse the number of Tier I members paying contributions, so the Tier II subsidy will continue to grow.

In fiscal year 2038, TRS estimates show that the System will be 68 percent funded and by 2046 will be 90 percent funded. The Tier II subsidy will be so large that by FY 2038 the state’s annual contribution will be devoted to paying off the unfunded liability. The entire annual cost of pensions after 2038 is paid for by members. According to estimates, the state’s annual contribution in FY 2038 is $9.1 billion and tops out at $10.2 billion in FY 2045, but in the next year drops substantially to $1.3 billion.

Finally, the Civic Committee’s latest suggestions to reform the pension code are contradictory and will not, taken together, lower the state’s costs.

While the first three suggestions drastically reduce benefits for retired members and therefore the overall cost, these savings are wiped out by the Committee’s fifth proposal – to have TRS and the pension systems “immediately” lower their assumed rates of investment return to 5.5 percent.

The current TRS assumed rate of return is 8 percent. Lowering the rate of 8 percent to 5.5 percent will automatically increase the state’s cost every year by billions of dollars. When you assume that TRS will be earning less from investments, the state must pay more to meet the total cost of pensions because total contributions from members and school districts is a revenue stream set by state law.

For FY 2014, TRS lowered its assumed rate of return from 8.5 percent to 8 percent. That 0.5 percentage point reduction alone added $473 million to the state’s annual contribution.The Committee’s fourth suggestion – shifting the annual cost of pensions to local governments – does nothing to lower costs for taxpayers. The proposal is just a transfer of responsibility from a larger group of taxpayers to a smaller group of taxpayers. The cost of the pensions remains the same. For TRS, the shift means that the annual cost of a pension for a school district’s teachers will not be spread out statewide among millions of taxpayers, but only spread among thousands of people who live in that school district, much like the way municipalities pay for the pension costs for police and firefighters.

The Civic Committee’s President, corporate lawyer Ty Fahner, likes the Governor’s proposal for unconstitutional gutting of public service employee pensions. But, he says that his big business buddies want more.

“We’re gratified that everyone now recognizes the depth of Illinois’ pension crisis. The governor’s announcement today demonstrates important movement toward solving our pension problems, but the devil is always in the details,” said Ty Fahner, president of the Civic Committee of the Commercial Club of Chicago. “We agree with much of what is outlined in the Governor’s plan, but believe that further refinement is necessary”

The question comes up because Ty Fahner and the Civic Committee spent one and a half million dollars over the past month trying to convince Illinois tax payers and legislators that the state was broke and it was because of teacher pensions.

And frankly, it was left up to bloggers and activists like Glen to take on this story using facts.

During the entire fight to preserve pensions, the leadership of the IEA never really confronted the issue of fair state funding and tax policy.

That may seem like a sleep inducing topic.

But basically it comes down to this: “Who pays?” The one per cent or the the 99%?

As Occupy Wall Street demonstrates, this question hasn’t exactly put people to sleep these last couple of months.

So, is Illinois broke?

Hell no.

But, like in other states and the rest of the country, giant corporations and multi-millionaires are sitting on piles of cash and paying nothing in taxes in return. In spite of that, corporations like Sears are holding their communities for ransom, demanding extensions on their tax-free status from the state legislature.

Rahm Emanuel is pushing for the state legislature to enact more tax breaks for the Chicago Mercantile Exchange and the Board of Trade when the General Assembly meets in special session on November 29th.

Seeing this, other giant corporations are getting in line demanding more state tax breaks for themselves.

State government may be broke. But the reason is that we live with a system that has state taxes falling on those least able to pay them. As Crain’s reported, Illinois has the lowest effective corporate tax rate in the entire midwest.

Glen asks the sensible question: Why does Illinois insist on preserving a flat income tax, the most regressive kind?

Why aren’t we taxing the rich who can most afford to pay?

Our political leaders have chosen to increase taxes and threaten the pension of public school teachers, while the billionaire gluttonous friends of Ty Fahner demand more and more. And they always seem to get it.

To read the Tribune you would think Illinois is taxing the crap out of corporate fat cats. You know, the job creators.

Corporate taxes are too high! Boo hoo.

It turns out that a little digging by Crain’s shows that the conventional wisdom is total nonsense.

Illinois has the most corporate friendly tax set-up in the Midwest.

Illinois has the second-highest corporate income tax of neighboring states at 9.5%. Iowa is highest, at 12%. But the corporate income tax rate doesn’t tell the whole story. The 30% increase earlier this year put Illinois at the fifth-highest rate in the nation. But when all taxes are figured in, it has one of the lowest overall effective tax rates on new investment in the country, according to a study by New York-based Ernst & Young LLP for the Council on State Taxation, a Washington, D.C.-based taxpayer lobbying group.

In spite of this, the Civic Committee’s Jim Farrell still claims Illinois public employees aren’t sharing the pain. What pain? Not corporate pain. Crain’s makes that clear.

“All the other good stuff doesn’t make up for the calamity that’s on the way,” warns Jim Farrell, former CEO of Glenview-based manufacturing conglomerate Illinois Tool Works Inc., who is leading a budget-reform campaign by the Chicago-based Civic Committee of the Commercial Club called “Illinois is Broke.”

He says the state will have to cut pension benefits drastically, and likely raise income taxes again in the coming years, to deal with more than $90 billion in unfunded pension liabilities.

What is all that good stuff? A state tax system that is heaven for corporations. And still they want our pensions.

The shocking inclusion of bully-boy Ty Fahner’s name on the pension surrender (for now) statement from GOP House Leader Tom Cross and Democratic Speaker Mike Madigan raises tons of questions about the corporate Civic Committee of the Commercial Club of Chicago and their role in state decision making.

Claims of strong-arm political tactics, numerous legislators with state facilities and public employees in their districts, and concerns about fairness sunk a bill that would have increased the amount current public employees would have to pay for their pensions.

House Speaker Michael Madigan, D-Chicago, and House Minority Leader Tom Cross, R-Oswego issued a statement Monday with Ty Fahner, the president of the Civic Committee of the Commercial Club of Chicago, saying the issue is dead until the legislature’s fall veto session. They plan to hold meetings this summer to look for solutions to the state’s $86 billion in pension obligations.

Rep. Jim Watson, R-Jacksonville, a member of the House Republican leadership, said some GOP members were told by leaders in the Civic Committee, a group of chief executives from Chicago’s largest corporations, that they would face primary challenges for re-election, if they didn’t vote for the bill.

“Hopefully they learned something from this, that if you do want help implement change, top down may not be the best model,” Watson said. “Calling caucus members and threatening them — that doesn’t play well. Yes, they may have lots of money, but some of these members down here who just won have good relationships with people. They know what they need to do to service their districts.”

An email to a Civic Committee public relations representative seeking comment was not returned late Monday.

Most folks didn’t realize that the Capitol had been moved from Springfield to 21 S. Clark Street in Chicago, the home of the Civic Committee.

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